Regional Disparity in Guangxi

Abstract

This paper investigates the intea-provincial vis-à-vis inter-provincial regional disparities in China. The data used include those on prefectures and other regions in Guangxi, southern China. Compared to its eastern neighbor Guangdong (Canton), Guangxi's economic growth is distinctively lower. Indeed it is one of the poorest areas in China.The results of the principal component analysis suggest that economic conditions in regions that are defined jurisdictionally as ‘prefectures’ are clearly different from those areas more economically classified as ‘cities’. The estimated income distribution structures suggest increasing disparities among prefectures. In fact our empirical tests reject both the β convergence and σ convergence in all prefectures. This implies that regional disparity is expanding in Guangxi. By comparison, the convergence hypothesis is accepted when twelve central cities within each prefecture (as an administrative area) are examined. Thus, regional disparities among cities are diminishing.The regional disparities in Guangxi are specific to its urban part or ‘cities’ and its rural part or ‘prefectures’. While the disparities among the cities are diminishing, their sizes are not large enough to be able to exploit agglomeration effects for further growth. Economic development in many prefectures in Guangxi is even less likely than in its urban areas because local governments often have incentives to allocate resources more to cities than rural areas. Probing deeper into optimal allocation of resources to urban and rural areas will be of particular interest and importance to future research along the lines of the present study.